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Brexit: your questions answered

Brexit: your questions answered

It’s official – the UK has begun the formal process of leaving the European Union, after Prime Minister Theresa May triggered Article 50 of the Treaty of Lisbon.

There is much uncertainty about the relationship that the UK will have with the EU in the future, and this could present both risks and opportunities. But the immediate impact of the Brexit vote is already being felt by consumers, driven by a falling pound and rising inflation.

So, Which?’s experts have put together this straightforward guide to answer your questions on Brexit. It will be regularly updated, answering new questions as events unfold now that the process of leaving the EU is underway.

In this Brexit guide, we answer your top queries and concerns in the following areas:

Food and shopping

Will the price of my weekly shop go up?

Matt Clear, from the Which? home team, says: ‘Food prices have already started to go up. They increased by 0.3% between February 2016 and February 2017 (the latest data available) following 31 consecutive months of prices falling.

‘We don’t know what Brexit’s long-term impact on food and shopping will be. But food prices are likely to increase as the value of the pound has declined since the referendum result. Some 40% of our food is imported. But a lot of food commodities are traded in dollars (wheat for example), so even when produced here, the price can be affected. Food production also depends on oil, which is traded in dollars and therefore affected by currency changes.

‘Manufacturers may cope with this increase in costs by making pack sizes smaller and using less expensive ingredients, although in some cases, prices are already going up. Chocolate manufacturer Cadbury’s, for example, announced last week that it may increase prices or shrink the size of bars in the wake of Brexit, without compromising on the quality by changing ingredients.’

Will I still be able to order goods online from Europe?

‘Yes, although in the short term they may be more expensive due to the pound’s drop in value.

‘Currently, if you buy goods online from outside the EU, you have to pay import VAT on items over £18 and customs duty on items over £120. If the UK leaves the single market, then these charges could also be applied to items you buy online from the EU – but it will be up to the government to decide that. Which? will be working with the government to make the consumer voice heard and to protect cross-border consumer rights.’

Savings, pensions and investments

What will stock market falls do to my pension?

Paul Davies, from the Which? money team, says: ‘The value of your pension and the stock market are intrinsically linked, as your pension savings are invested in a mix of shares, bonds and other types of assets. Following the UK’s vote to leave the EU, stock markets plunged dramatically. They’ve since recovered but, as ever, continue to fluctuate.

‘Any impact on the state pension is likely to be felt only in the longer-term. This is because the state pension isn’t backed by investments and therefore isn’t directly affected by market movements.

‘The current ‘triple lock’ on state pensions guarantees that the state pension will rise by price inflation, or average earnings or 2.5% – whichever is the highest. It will therefore be important to monitor whether the government reviews this commitment at any future Budget in response to changes in the economy.’

Should I move my investments somewhere safer?

Michael Trudeau, from the Which? money team, says: ‘The short answer is probably not. If you had a plan when you first invested, then you should stick with that plan. You already know that investments go up and down, markets fluctuate in the wake of unpredictable world events, and investing is a project for the long term.

‘Trying to time the markets is an almost impossible task, something even the professionals struggle to do consistently.

‘However there is a small “but”: if, given the recent volatility in the markets, you realise that you simply can’t stomach the amount of risk that comes with investing in shares, then yes, maybe you should consider moving money into somewhere safer.

Your portfolio make-up should reflect the amount of risk you’re willing to take, and if that changes then so should your portfolio. But be aware that at this tumultuous time it is possible you’d be selling shares at a low, and that they might – or might not – recover later.’

Are my savings still fully protected?

Rubal Channa, from the Which? Money Helpline, says: ‘For now, your savings continue to be protected by the Financial Services Compensation Scheme, just as before the referendum vote. This is the compensation fund of last resort backed by the UK government.

‘Under the scheme, the first £85,000 of your savings – or £170,000 if held jointly – will be refunded to you within seven working days in the event of a UK bank or building society failure.

‘The process of leaving the EU is likely to take at least two years and it’s possible that these limits may be reviewed in the event of a formal exit. Savers will be given notice if this is going to happen.’

Will I be poorer because sterling is worth less?

Rubal says: ‘Going abroad or making purchases in foreign currency will be more expensive.

‘For investors, the question is whether poor exchange rates for sterling will continue, and this may not be a long-term situation. There has already been some recovery.

‘If you have a diversified portfolio where there’s an overseas element, the extent to which your investments might be affected depends on what proportion of your portfolio is invested in assets that are vulnerable to fluctuations in the exchange rate, which in turn is likely to depend on your attitude to risk.’

How will inflation affect my savings?

Chiara Cavaglieri, from the Which? money team, says: ‘The Consumer Prices Index (CPI) shot up to 2.3% on 21 March, and this has had a significant impact on savers’ ability to get a “real” (above inflation) return on their savings.

As our story revealed, just one five-year fixed-rate savings accounts now pays more interest than inflation. The only other savings products that beat inflation have limits on how much you can contribute or withdraw, or require you to open a current account to deposit your money.

‘Savers need to be nimble to find the best rates in the market, and look at alternative routes to getting a better return, potentially by taking on some more risk. Options include peer-to-peer lending accounts, or investing in the stock market through a stocks and shares Isa.’

Your consumer rights

How will my consumer rights be affected?

Adam French, from the Which? consumer rights team, says: ‘Even though many of our consumer rights are based on EU directives, most are actually enshrined in UK law. The Prime Minister has announced that the government will introduce a Great Repeal Bill to end the supremacy of EU law in the UK, a crucial part of leaving the European Union. The bill will also bring all EU laws onto the UK books.

‘This means that when Article 50 is triggered, laws and regulations made over the past 40 years while the UK was part of the EU will continue to apply and unless the UK government decides to change the law, many of your rights will stay the same even after we’ve left the EU.

‘Which? will work with the government to ensure that the consumer voice is heard and your consumer rights are protected throughout the UK’s withdrawal from the EU. This includes rights when buying products that originate in other countries and specific rights that we currently have as EU members, such as compensation for flight delays, for example. Until then, your consumer rights will stand as they are today.’

Find out more: Brexit and your consumer rights

Cars and petrol prices

Should I buy a car now or later?

Lisa Barber, from the Which? cars team, says: ‘There’s no immediate reason to delay buying a car, as long as you can afford it and are confident you can keep up any repayments (if you buy it with a loan or on finance) and meet ongoing running costs. In fact, some models registered before 1 April 2017 may work out cheaper to buy, when new car tax rules come into place. This is because owners of low-emission cars will no longer be exempt from paying car tax.

‘And although some supermarkets have recently cut fuel prices, there’s no guarantee that prices won’t climb again. Which means it’s important that you choose a car that offers good fuel economy (mpg). Realistic, accurate mpg figures taken from our rigorous lab and road tests are shown in every Which? car review.

Will the price of imported cars go up?

Lisa says: ‘It’s possible the prices of cars built outside the UK will go up due to fluctuations in the sterling exchange rate. However, in the short and medium-term, manufacturers and dealers may try to keep prices at or close to their current levels in order to maintain demand and sales volumes.

‘We may even see attractive new deals being offered in order to tempt buyers who may be nervous about the state of the economy. But don’t be tricked into buying an uneconomical, unreliable model. Shop around and haggle to get a good price, and make sure you use our research to choose a car you can rely on – see our best cars.’

‘In the longer term, it is unclear what kind of trade deal we will have with the EU and what impact that will have on the cost of cars, due to import tariffs and customs. That won’t become clear until we see the outcome of the government’s negotiations with the EU.’

Will the price of petrol and diesel go up?

Lisa says: ‘Fuel duty was frozen in the latest budget and some supermarkets have recently cut fuel by 2p a litre. However, prices have gone up since the start of the year.

Prices are likely to go up further, and possibly quicker, because oil is traded in US dollars and sterling has lost value compared to the dollar. Again, the best thing to do is choose a fuel-efficient car, and try to drive economically.’

Homes and mortgages

I’m a first-time buyer. Will Brexit make it easier or harder for me to buy a home?

David Blake, from Which? Mortgage Advisers, says: ‘Brexit could actually make things slightly easier for first-time buyers. Mortgage rates were already low, and could well get even lower.

‘The average mortgage rate on offer to first-time buyers fell from 2.99% at the start of June 2016 to 2.89% at the end of March 2017, according to Which? analysis of Moneyfacts data. There are also still plenty of mortgage deals available, with 4,199 on the market for first-time buyers as of the end of March.

‘Some experts have predicted that house prices will fall, too. However, homeowners who had been planning to put their property on the market might hold off until things have settled, pushing up demand and slowing any price reductions that would otherwise have happened.

‘Either way, saving a big enough deposit is likely to remain the biggest challenge for first-time buyers. As a rule of thumb you’ll need at least 5%, but it usually pays to save more.’

I was planning to sell my home. Should I hold off?

David says: ‘It’s hard to give a definitive answer. If the lack of certainty around the economy makes buyers nervous, you may find it hard to sell your property.

‘That said, if other people decide to hold off selling their own properties for now, this will mean you have less competition, and demand for your home may be higher. It may also be worth acting now if you’re worried about house prices falling over the next few months.

‘According to the Office for National Statistics house prices have risen every month since June 2016, although the rate of growth has been falling since the referendum vote. This, however, is based on national averages. You can find out what’s happening in your area with our interactive house prices map.’

What is likely to happen to mortgage interest rates?

David says: ‘In August, the Bank of England lowered the base rate to 0.25%. Most people with tracker mortgages immediately benefited from a lower rate as a result (though some tracker rates have collars on them), while many lenders lowered their standard variable mortgage rates.

‘The base rate could fall even further in the wake of Brexit, which may help you secure an even cheaper mortgage. However, there’s no guarantee that mortgages will get cheaper – nervousness from lenders could prevent them cutting rates and, as rates are historically low already, they don’t have much further to fall.

‘In the medium term, rising inflation caused by more expensive imports could mean the Bank of England decides to increase the base rate.’

Is now a good time to take out a fixed-rate mortgage?

David says: ‘The uncertainty around interest rates means fixing your rate could be a good idea if you want to be sure how much you’ll be paying each month. But as interest rates could potentially drop further later this year, it might be worth waiting to see what happens before locking yourself into a deal.

‘Think ahead before committing to a two-year deal, as this could leave you needing to remortgage near the actual point of an EU exit, which could cause more uncertainty in the markets and increase borrowing costs. If you know you’re unlikely to move for a few years, fixing your interest rate for a longer period could protect you from potential future rate rises.

‘Some may find it more important to have a flexibility rather than certainyt. For a long time, tracker mortgages were dismissed as they didn’t offer good value. However, many of these deals have no set lock-in period, enabling you to review your mortgage and potentially change products or remortgage at any time without incurring charges. There are even some fixed rates on the market that offer this facility, which are worth considering in what is likely to be an uncertain time.’

Travel and mobile roaming

Will the cost of flights and holidays go up or down?

Amber Dalton, from the Which? travel team, says: ‘It’s likely that a weaker pound will lead to an increase in the cost of flights in the short term. A drop in sterling also means that your holiday spending money won’t go so far.

‘If you’ve yet to book, it may be worth looking at UK holiday companies which have frozen prices for the coming season. Riviera Travel has fixed the prices of its river cruises on departures up to October 2017, while Which? Recommended Provider Inntravel will guarantee the prices on its Walking & More programme for winter 2016/17. Also, consider whether to book and pay for any extras upfront to protect yourself from a further weakening of the pound.

‘If you’ve already booked a holiday, under Package Travel Regulations, a tour operator can increase the cost of a confirmed holiday in the event of a change in the exchange rate, but only under certain conditions. The holiday companies must absorb the first 2% of any increase, and if there’s a ‘significant’ change in price (considered to be more than 10%), you must be given the opportunity to cancel.

‘It’s worth noting that many holiday companies, including Which? Recommended Providers Inntravel, Ramblers Worldwide, Riviera Travel and Trailfinders guarantee not to apply surcharges to booked holidays.’

Will I have problems getting into any other EU countries?

Rory Boland, from the Which? travel team, says: ‘Until the UK leaves the EU, you should be able to travel just as easily through EU borders as you can now. Given that it will take at least two years for us to exit the EU, this shouldn’t affect any holidays you currently have booked.

‘It’s possible this might remain the same even after we leave the EU, but at this stage nobody knows for sure. We’ll keep an eye on the situation, and if anything changes, we’ll update you in Which? Travel magazine and online.’

Will my flight rights change?

Adam French, from Which? consumer rights team, says: ‘The Civil Aviation Authority has confirmed there will be no immediate changes to your right to claim

‘But it’s possible that this may change in the future. The right to claim compensation for flight delays or cancellations does not derive from UK law; instead it comes directly from an EU regulation. We won’t know whether these rights will change until negotiations between the UK and the EU on this area have been concluded.’

Which queue will I join at airport passport control and will I have to queue for longer?

Guy Hobbs, from the Which? travel team, says: ‘Airport queues are Which? members’ biggest frustration when flying to and from the UK. If we lose access to the fast-track EU passport queues, it’s hard to see how that won’t lead to longer waiting times at some European airports. But we currently don’t know whether this will happen.

‘We will keep track of passengers’ airport experiences after the UK leaves the EU. In the meantime, you should join the same passport queues as before.’

Is the Ehic still valid?

Trevor Baker, from the Which? travel team, says: ‘The European Health Insurance Card currently lets you access state-funded healthcare in much of Europe, not just the EU, for free or at a low cost.

‘It will still be valid this summer and during the period of Brexit negotiations. After that it will depend on what agreement the UK reaches with the EU. ‘If you don’t already have a card it’s a good idea to apply for one. In normal circumstances they’re valid for five years, but it’s not yet clear whether that will be still be the case.’

Does this mean I’ll still have to pay mobile roaming charges?

Jon Barrow, from the Which? technology team, says: ‘No one truly knows. The cost of using your phone in Europe has come down dramatically over the last few years because of EU rules on roaming charges. This has helped curb the problem of being hit by surprisingly high charges while you’re abroad.

‘Politicians in the EU have been keen to completely eliminate roaming fees in Europe – ie the additional cost for texting, calling and surfing the internet – and this will happen on 15 June 2017. UK residents will benefit from this move in the short term as EU law will still be in place but it’s not yet clear what will happen once Britain leaves the union.

‘Some mobile providers already let you use your UK allowance of calls, texts and data overseas, and they may continue to offer such deals after Brexit.’

Find out more: Brexit and mobile roaming – more info from our Tech Daily blog

Employment and education

Will UK working hours go up?

Louise Wilkinson, from Which? Legal, says: ‘Working hours are governed by the terms of the employment contract and any changes to legislation due to leaving the EU are unlikely to affect existing contract terms.

‘The maximum 48-hour working week permitted under the Working Time Regulations, which implement an EU directive, may be a focus for change as a consequence of leaving the EU but it is not possible to predict whether they will be and, if so, what such changes are likely to be. As the law stands at present, workers can and frequently do contract out of the 48-hour maximum.’

What rights do I have if I’m made redundant?

Louise says: ‘Most of the laws that relate to redundancy don’t come from Europe, but from home-grown legislation and case law. Therefore leaving the EU is unlikely to affect redundancy law.’

Will I no longer be able to work or study in other EU countries?

Louise says: ‘Whether individuals will be able to continue to work and study in other EU countries is going to depend on what terms are negotiated as part of the UK leaving the EU.’

Energy and light bulbs

Will my energy bills go up?

Liz Ransome, from the Which? home team, says: ‘There are many factors that affect our energy prices, so it’s important to first understand how the energy industry works in the UK. The UK’s energy policy is mainly determined at a domestic level. The EU sets standards to stop member states polluting Europe’s environment, but each state can choose its energy mix within that.

So, as an example, while Germany wants to ditch nuclear, our government’s planning to revive it with the construction of Hinkley Point C in Somerset.

‘A chunk of our energy bills currently goes towards funding energy improvements. There’s nothing to indicate that the UK’s green energy targets will be scrapped due to Brexit, or that the part of your bill that goes towards funding improvements will be decreased. However, leaving the EU could release us from certain EU energy goals, once we’ve disentangled them from our own and established a new energy trading relationship with Europe.’

Find out more: We’ve covered Brexit and energy bills in an extensive story, including views from the big six energy suppliers.

Does this mean we can have more powerful vacuum cleaners again?

Matthew Knight, from the Which? home team, says: ‘It’s worth remembering that more powerful vacuum cleaners don’t necessarily mean better cleaning. In fact, the EU Ecodesign regulations that were put in place on vacuum cleaners in 2014 have been very successful in cutting the power used by vacuum cleaners, while still maintaining a high pick-up level of dust and debris.

‘Even if the the restrictions on vacuum cleaners are reversed, the UK market is much smaller than the European market, so we’re unlikely to see major manufacturers such as Miele, Bosch and Dyson making more powerful vacs specifically for the UK.’

Will I be able to buy old-fashioned light bulbs again?

Matthew says: ‘We’ll need to see whether the UK is still subject to European Ecodesign laws. It’s worth knowing that old-fashioned light bulbs fail much sooner, and use almost 10 times as much energy as replacement LED bulbs.’

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